The headline says it all. If you are a little tech interested you might have followed the discussion in the US where Verizon and Google have formed a contract framework giving power to the big wireless networks potentially allowing content creators to pay for preferential treatment. An example could be Google saying they will pay more to have faster service for YouTube or in the extreme case Verizon can say we will have an exclusive contract with a Hollywood studio but the movie is only distributed on “Verizonnet” (not the internet).

Obviously (and thankfully) there is a huge outcry asking if this is the end of the free and open internet. I oversimplified it as Google & Verizon came out with a joint press conference in which they claimed they wanted to protect the internet as it is but want the mobile web non regulated. For better and more in depth analysis go and read multiple stories here: http://techme.me/=uVd

So what does that have to do with Chile?

Chile is the first country in the world which tells the Internet Service Providers (VTR, Telefonica etc….) that they have to treat every internet site the same. If you as a customer pay for 50GB it is not up to your Internet Service Provider to tell you what you can and cannot watch and which service will be faster or slower. Bravo Chile…. Way to go…. & Dear US & Rest of the world – Don’t let the “Do no evil company” and Verizon get away with pretending to be the all goods and do no harms & let the mobile internet be as open as the good old internet is….

Source covering Chiles Law (in Spanish)

Image Source

..that is what we in Austria call countries where there is no consistency in laws and you cannot trust your politicians.

See here the meaning of Banana Republic

There have been many examples (please add your examples in the comments) about bad politics in Argentina and I will list the ones that I have heard about through international media (mostly economist) here:

• 2002 The end of convertability (click on link for more info)
• 40 % export tax (!?) on Argentinian beef
• The Nationalisation of all the private Pensions Argentina nationalised all the private pensions (took them) 2009

Current event: Cristina Fernández de Kirchner (the president) is working on a law to impose a new electronic tax on TV’s, Laptops, personal Computers, GPS Navigation Systems and phones if they are not produced in the south of Argentina. This will raise the VAT of such goods to 21% from previously 10.5% . Now the populist President calls things like laptops and computers luxury goods and this is the reason why she had proposed this law. The problem as I see it: A GPS system or a PC will never be produced in Argentina anyway. All that can and might happen is that they will be assembled in Argentina so the Argentinean companies will buy the usual components (GPS modules, computer chips, batteries, lcd screens etc…) from foreign companies and assemble them in Argentina. In my opinion two things will happen: Some people will build these assembling companies in the south of Argentina but not many. Reason being in a "Banana Republic" laws change quickly and there is no guarantee of investment. Imagine building a factory and then 1 year later the law which was responsible for you building the factory changes. Goods produced in Argentina will become more expensive as there is a lot less competition. The rich Argentinian consumers will still be able to afford computers and will mostly bring them from their holidays in Chile, Uruguay or the US but the poor will be pushed out and that is a real shame / no computer / no access to knowledge.

This is bad because there are foreign companies that have invested in Argentina and created good jobs there. The mostly Argentinean employees of these corporations will suffer. But it is worse because the general Argentinean consumer will suffer by paying higher prices for luxury goods (sic) – essential goods like a computer (!) It is hard enough for Argentineans to afford a computer right now.

While I did not find a international price comparison for Computers here is one for TV’s before the new tax

Lets hope the Argentinan MP’s don’t vote for this new “luxury tax”.

There is a Facebook cause which you can join and there are also blogs which have been created to speak about this issue: No Al Impuestazo tecnologico

This is my personal opinion about Argentinian politics. I like the people, the food and the country itsself but the politics are terrible. If you have an opinion I invite you to state it in the comments below. Feel free to comment in English or Spanish or even in German (I volunteer for translating the German

Whilst the entire world seems to be in huge economic trouble the situation in Chile seems a lot more stable. Here is my view of the current situation with link to sources. First the bad things (The article will turn more positive I promise just read on)

House prices are falling in Chile and the UF (the currency to buy houses and apartments in Chile) is falling against the local currency the Chilean Pesos. See the chart below:

Building Projects from private investors are put on hold. Just one example below:

The Torre Gran Costanera in las Condes should have become Chiles tallest building, costs where estimated at USD 600 mio. but the project has been put on hold.

Chile is the world’s largest copper producer, accounting for around 35% of international output, and copper is by far its most important export. In 2007, export earnings from copper reached $37.6 billion, or 56% of total exports. Moreover, government revenue from copper–in the form of the profits of state copper company Codelco and taxes paid by private mining companies–accounted for almost a third of total fiscal income. Source Forbes The Copper price has been declining rapidly and is now at less than half of its peak.

Now lets focus on  the positive news:

Even though the copper price has declined heavily since its peak in August 2008 the government had not relied on these high prices but forecasted with a price of $1.37 a pound less than half last years average. Source

The government did not spend all those extra profits but created a reserve fund in foreign currencies.

Chile has a more advantages compared to other economies in both South America and the rest of the world:

Chile had a high interest rate as the inflation (compared to the first world) was pretty high. The inflation went down and the Government is steadily decreasing its interest rates. See here a quote taken from Bloomberg:

Chile’s peso capped its first quarterly gain in a year, making it the world’s best performer in 2009, as the government tapped its foreign savings and the central bank slashed interest rates to boost growth. The peso advanced 9.5 percent against the U.S. dollar this quarter, more than any other currency tracked by Bloomberg.

The Chilean Central Bank has cut interest rates from 8.25 % at the end of 2008 to 2.25 currently (source)

Chile has US$23 billion in foreign currency reserves some of which it is using to support small businesses and the local economy.

Source The Economic Times

And it is also using part of these currency reserves to stimulate growth. The Chilean President unveiled a new stimulus package at the end of March which should translate to an extra 6 billion USD in additional lending to small businesses and homes. Source

After I finished this article I found another amazing article from my favourite magazine the economist about Chile’s stimulus package. Read it…

So this is why I am more positive about Chiles economy then about most other world economies.
What do you think about the Chilean economy? Are you feeling the decline? Are you positive or negative towards the short term future of the Chilean Economy?

update: by request of Oliver (who is right) I have also added a longer chart to reflect the history of the UF. As I did not find a chart on the net I have created my own using data from 1.Jan.2007 to 1.April.2009

UF also Unidad de Fomento is used in Chile as a currency for Property and Mortgages

Since Mortgages are also based in the currency UF (a weird thing) the decline helps people who currently have a mortgage.

update April 20th 2009: The Chilean Economy shrank 3,9% in February 2009 the 4th negative month in a row. The Chilean economy is now expected to contract by 0.5 % in 2009 see here the Reuters article from April 17th.

If this is true is China still a Country that can be trusted and the world can do business with? I am not saying I am for an embargo (clearly not) or anything but this story does make me wonder. Who was behind the attacks? What does the Chinese government know about it etc…

Update: I am just reading through an editorial comment “China’s cyber-spies spread their net” and have found this

Indeed, such are the Beijing government’s efforts to control the activities of its citizens on the Internet that any hackers operating from China are almost certainly working for the authorities. Yet it is probably also right to assume that the US and other western governments are busy infiltrating the computer systems of foreign governments. It is therefore disingenuous to complain too vigorously when those same foreign governments become good at doing it back.

very interesting!

Update2: I just watched an inverview with the editor of the FT – Please ignore the “might” in my headline – the FT has done an extreme amount of research and double / tripple checking on the information and they are CERTAIN that it was the chinese military

 

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